Earth Science Tech, Inc. operates as a strategic holding company, focused on value creation through the acquisition, operational optimization, and management of its operating businesses. The Company’s current operations include compounding pharmaceuticals, telemedicine and real estate development through its wholly owned subsidiaries: RxCompoundStore.com, LLC, Peaks Curative, LLC, Avenvi, LLC, Mister Meds, LLC (“Mister Meds”), and Earth Science Foundation, Inc., Las Villas Health Care, Inc., DOConsultations, LLC., and an 80% interest in MagneChef. To learn more, please visit: www.EarthScienceTech.com
INTERVIEW TRANSCRIPTS:
WSA: Good day from Wall Street. This is Juan Costello, senior Analyst with the Wall Street Analyzer. Joining us today is Giorgio Saumat, he is the CEO and Chairman at Earth Science Tech. The company trades on the OTCID, ticker is ETST. Thanks for joining us today there, Giorgio.
Giorgio Saumat: Good morning, Juan. Thanks for having me.
WSA: Yeah. So please start off there by providing intro and overview of the company.
Giorgio Saumat: Alright, so, Earth Science Tech originally was involved in the CBD business prior to my involvement. And then I kind of, I was a lender. I actually lended money to the previous management and the company. They were having some trouble, and then I kind of stepped in and then decided that we were going to take the company a different direction. So we turned it into a strategic holding company. And the goal as a strategic holding company is to acquire or roll in different businesses, turn them around, operate them, generate cash, and then reinvest that cash. So we started originally in the healthcare sector and we’re still very heavily involved through RxCompoundStore, which is a compounding pharmacy. And we just launched Mister Meds, which is another compounding pharmacy in Texas. So that kind of opened up a new market. And then the other company we had was Peaks, which is a telehealth company similar to — I think most people compare us to HIMS Health.
And then we started there and then we continued down the path of acquiring DOConsultation, my online consultation. DOConsultation is another telehealth platform. My Online Consultation is actually a doctor network. So if you see what we’re doing in the healthcare sector kind of vertically integrates, right? The patients go to the doctor, the facilities may need a doctor and we can provide that. They need the medication, we can provide that. And then we expanded recently in the last quarter, we went into the real estate investment sector, and then we launched or acquired also a direct-to-consumer brand in MagneChef to diversify the holdings of the company.
WSA: Yeah, that’s great. And can you bring us up to speed on some of the most recent news as you put out the 10-K and had fiscal year results at revenue over 33 mil?
Giorgio Saumat: Right. So yeah, that’s kind of a big deal, right? When I took over in 2023, the company was doing roughly about 200,000 a year in revenue. We took it up to just about 12 last year. And then this most recent 10-K was 33.1 million in revenue and actually turned in over $3 million in net profit. So yeah, that’s where we are. I think we’ve made tremendous progress and I think it’s a testament to the team that we have.
WSA: And yeah, so perhaps you can talk a little bit more about the sectors that you operate in. What are the key trends that you’re seeing there, and what’s the synergies that you look for that fit your business model?
Giorgio Saumat: So I’ll start with the healthcare, because I think that’s the one that most people know us for—at this time at least. So there’s a lot of trends going on in the compounding pharmaceutical space, right? The most people focus on weight loss and the GLP ones. And that is a good part of the RXCompound business or has been, but that’s not the only part, and that’s certainly not the fastest growing part. We are very diversified, not only as a whole in Earth Science Tech, we try to diversify our offerings within each subsidiary. So in that space, I would say what I like to call the lifestyle pharmaceuticals, right? People want to look good, they want to feel good. They want to do hormone replacement and all these kinds of other kind of lifestyle things that make them feel better.
They want to take care of their hair, their skin, and I think that’s the fastest growing part on the healthcare side. We also are growing our doctor network. We’re getting a lot of facilities signing up and using our doctor network, and that’s kind of a great business because we charge our fee for using our platform, and the doctors get paid a portion and we keep it. It’s a very low overhead business that once the tech was billed out. So that’s really nice to have.
In terms of the real estate part in Avenvi, the nice thing about that is we own our own freestanding building through Avenvi for Mister Meds. So the building where Mister Meds is housed is actually owned 100% by us, no loans, no debt which is nice. We want to use that same model for RXCompound once our lease is up. We’ll just self-fund the purchase of our freestanding property here in the Miami area that we could house and expand that operation. And then also we are reinvesting by purchasing vacant land up near Tampa. We’re developing that land. Actually, just today, we just announced that we broke ground on our first development, and again, completely self-funded through the cash flows of the other subsidiaries and the cash flows from Avenvi. So there’s no debt there either. Once we build these homes and we’re doing it trying to hit a niche market, right?
Florida is very expensive. There’s no escaping the real estate inflation that’s happened over the last couple years since COVID. And I think because we’re scaling and building multiple homes at the same time, we’re able to source the products, the materials at a much lesser rate, plus the labor at a much lesser rate because we’re providing long-term jobs for these contractors. And that allows us to go after the sub $500,000 market in the homes. And that’s a pretty big deal in Florida. Very hard to find a house that’s almost 2,700 square feet and you can get for $430,000. We’re able to build these homes roughly around anywhere between 260 to 280 depending on the size. If it’s a smaller home, obviously in the lower end of that range, if it’s a larger home, it’s a higher end of that range. But our goal is to sell it below where the market is in the real estate while still making a significant profit and then continue that model throughout. I think we’ll be able to move these homes pretty quickly and bring that cash back to Earth Science Tech and its shareholders.
The last piece of this, because the company’s really broken up into three parts is the direct-to-consumer, which is the one that I think most people question me about at least. And that one actually we just started, we just took them over in April. We revamped all their sales channels. We revamped everything. We actually just began the marketing efforts on July 1st and they’re performing very well to start off. I’m actually very surprised. I can’t really release numbers or anything, it’s too early, but I’m very impressed with their numbers.
Now, to address what you just said in terms of the integration, the nice thing about being a holding company like this and starting off in the healthcare sector and then branching out into everything else that we’re branching out into, is that healthcare marketing is extremely difficult and very highly regulated, right? So if you can do that, then you can really turn around and help pretty much any company that we have or any other subsidiary with their marketing. And so the scale that we provide for the subsidiaries is that they don’t have to worry about legal, Earth Science Tech provides them the legal. They don’t have to worry about accounting, we are — the parent company takes care of that. They don’t have to worry about IT, the parent company takes care of that. And then they don’t have to worry about marketing because the parent company takes care of that. So all they got to worry about is operating. And so by already having mastered the healthcare thing, it makes it very, I don’t want to say easy, but we’re pretty good at administrating these companies and getting them to grow. Obviously the results show that.
WSA: So yeah. What are some of the key goals and milestones that you’re hoping to accomplish here over the course of the next three to six months?
Giorgio Saumat: So, my number one goal across every single sub is for them to be cash flow positive and so that they can bring company back — I’m sorry, bring cash back to the parent company. That’s the goal. As of right now, we know RXCompoundStore is cash flow positive. We know that Peaks has turned a corner. And by the way that’s an impressive story because you take something like HIMSS that a lot of people compare us to, right? It took them 15 years to get profitable. It took us 18 months. I think it’s an impressive feat for a small company to do that. So those guys are doing there and then we’re going to continue growing that DOConsultation and Las Vegas are on their way. They should be cash flow positive here in the next, I would say, three months.
As I said earlier, the MOC, My Online Consultation is already cash flow positive because it has such low overhead, really once the tech was built out. And Avenvi, our real estate [branch] is already cash flow positive. You’ll see that [reflected][— not on this 10-K, but the previous quarter they had onetime gains. I think it was $146,000 if I’m correct. So the goal right now at this point is to continue expanding and growing those subsidiaries that are cash flow positive and making sure that we get the others that are not cash flow positive in the next three months. That’s our goal. And I think we’re in a good path to getting there.
WSA: So yeah, perhaps you can talk about your background and experience Giorgio, and who the key management team there? How are your interests aligned with shareholders?
Giorgio Saumat: So, I appreciate that because this is probably the most important question, right? Any company — we say it here all the time, we’re in the business of people. Doesn’t matter what product we’re working with or what technology we’re working with, it really matters who the people are, right? So my background is in real estate and is an investor. I ran a couple of big and large investment groups here in the Miami area. Couple years ago, I signed on to a nice big investment and kind of took a retirement, took a year off retired because my family was pretty good.
And then the investment in Earth Science Tech came about — and that came about because Mario, our Chief Operating Officer, he was a childhood friend. I couldn’t stress what a brilliant logistical mind he is. And really it’s been the dynamic between the two of us, me being able to guide him and him being the general on the ground, making sure everything happens. And his background is in logistics. So my background is investing, lending, real estate. His is in logistics. And he’s — obviously again, you can’t do what we do out of the space that we do it out of, unless you can be really good logistically with the people and with the technology and with the products and he really has that down.
Then we have Ernesto who is our Chief Financial Officer. He’s obviously a CPA. He’s — again, he comes from a background in working in high-end car dealerships. And that has a lot of complicating financial aspects to it, and especially in the lending and managing the cash because it’s a very cash intensive business and he’s doing a phenomenal job for us. And then you have Chris Rose, who is our CTO, and he came from Progressive Insurance. He was a very high technology executive there. We were very lucky to get him on our team. And he’s the mastermind behind getting all of Mario’s and my ideas and making the tech work. And it’s funny because a lot of the times I tell people when they ask me about us, and I say, in a lot of ways I feel like we’re moving into becoming a tech company because we’re managing all these online companies and we’re building all these platforms for the health industry. We have basically our own EMR and our own prescription as a sending system. And all the things that they do is pretty incredible and those things lead to the success of what we’ve done, honestly.
WSA: Yeah, certainly. So right now, the current share price on the OTC is 19 cents a share. Market cap is about 56 million. So yeah, before we conclude here Giorgio, why do you believe investors should consider the company as a good investment opportunity at this point today?
Giorgio Saumat: Well, I’m an investor myself. I’m actually the largest investor in ETST. And being the CEO, like any CEO, you always need to feel that your company’s undervalued. I certainly feel that to be the case with ETST. I mean, you’re looking at a company again, 31 million last year. We don’t put projections out for next year for this year, but we went from 12 to 33. I certainly expect, and I’m pushing my team to keep that trend up to the right. And so, yeah, I mean, I think we’re going to — once we get the remaining subs cash flow positive in the next couple months here, I think the company’s going to be generating a lot of cash and I think the shareholders are going to see that. And then the other thing that we haven’t discussed at all in this call, and it’s kind of the elephant in the room, is when do you find a company that’s in the OTC markets that’s consistently buying their shares back, which we are?
And it’s an ongoing buyback program. It’s supposed to end in December, but I’m certainly going to push the board to extend it, or I’m going to be a big advocate for that. And you have a company with zero share dilution. We don’t have an executive options plan. We don’t offer it to our employees. Alternatively what we do is we pay our employees well, and we give them the option to buy our stock in the open market. And if you — if you follow the Form 4s, you’ll see that there’s a lot of buying going on by the insiders. And the reason is they believe in the company, we believe in the company, I believe in the company. We know where we’re headed, we’re generating cash, and we’re only going to get better and bigger from here.
So, as an investor, I think there’s every key point that you want to see in a company, not even a small company. You want to see all these points in a large company. Much — when you see it — when a company of this size it, I think it’s impressive. I definitely am — I know I’m part of the work, but I’m impressed by it every day.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on the upcoming progress. And we’d like to thank you for taking the time to join us today, Giorgio and introduce our investor audience to Earth Science Tech. It was great having you on.
Giorgio Saumat: Thank you so much for having me. It was a pleasure.
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